Deutsche Bank co-CEO Fitschen named suspect in Kirch case

Joern Poltz

3 Min Read

MUNICH, Germany (Reuters) - German prosecutors named Deutsche Bank (DBKGn.DE) Co-Chief Executive Juergen Fitschen as a suspect on Monday in a dispute over the collapse of the Kirch media empire, adding to the bank’s growing list of legal problems.

Juergen Fitschen, Co-CEO of Deutsche Bank AG gives a speech during an economic conference organized by the conservative Christian Democratic Union (CDU) party in Berlin June 25, 2013. REUTERS/Fabrizio Bensch

Deutsche Bank said it was sure that Fitschen, 65, would be cleared after prosecutors in Munich said they were investigating whether he gave misleading evidence in a decade-old civil suit brought by the heirs of late media mogul Leo Kirch. They accused the bank of undermining the business.

Germany’s flagship lender is already burdened by several judicial and regulatory inquiries, including a probe into whether its traders helped rig Libor reference interest rates.

Deutsche Bank booked 1.2 billion euros ($1.62 billion) in legal costs in the third quarter of 2013 alone, wiping out profit for that period and taking total legal provisions to 4.1 billion euros.

The bank told investors then to brace for the possibility of costly settlements ahead, saying in last week: “We expect the litigation environment to continue to be challenging.”

As well as the costs, investors worry that the bank’s management is being distracted by dealing with these issues.

Fitschen is also among 25 employees being investigated on suspicion of tax evasion, money laundering and obstruction of justice over trading in carbon emission permits.

Unlike four other European banks, Deutsche Bank has yet to reach a settlement with regulators over allegations of Libor rigging, though its trading operations are being investigated. It was one of nine banks sued by U.S. mortgage company Fannie Mae on Friday for a total of more than $800 million. The government-controlled group says Libor scams cost it money.

Leo Kirch had claimed that, in 2002, then Deutsche chief executive Rolf Breuer triggered his German media group’s downfall by questioning its creditworthiness in a television interview. The bank and its officers denied that.

The legal battle that ensued has seen prosecutors search Deutsche Bank offices and has dragged through the courts for a decade. Last year, a Munich judge said Kirch had suffered damages of between 120 million and 1.5 billion euros. A final settlement amount in damages has yet to be determined.

Fitschen’s contract as co-CEO was extended until 2017 last week. Deutsche said in a statement on Monday after the prosecutors’ statement: “The bank is absolutely convinced that this suspicion will prove to be unfounded.”

Additional reporting by Thomas Atkins and Christiaan Hetzner in Frankfurt and Daniel Wilchens in New York; Writing by Thomas Atkins; Editing by Alastair Macdonald